Arbitration time-bar clause cannot defeat contractual claims where it extinguishes enforcement rights under amended Section 28.

A contractual clause requiring a demand for arbitration within 90 days of intimation that the final bill was ready could not be used to extinguish the contractor's right to enforce its claim through ordinary legal process. The amended Section 28 of the Indian Contract Act, 1872 renders unenforceable a term that restricts a party from enforcing contractual rights after expiry of a specified period. On that basis, rejection of the claim solely for non-compliance with the 90-day condition was not justified, and the claims were required to be decided on merits by the arbitrator.

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Issues: Whether the arbitrator could reject the contractor's claim solely because the demand for arbitration was not made within 90 days under the agreement, and whether such a clause was void under Section 28 of the Indian Contract Act, 1872.

Analysis: The contractual stipulation extinguished the contractor's right to seek arbitration if no demand was made within the stated period after intimation that the final bill was ready for payment. Such a term limited and effectively destroyed the enforceability of the contractor's contractual claim by the ordinary legal process. In view of the amended Section 28, a clause that restricts a party from enforcing contractual rights on expiry of a specified period cannot be sustained. The claim was not examined on merits and the objection based only on the 90-day condition could not justify rejection of the claim.

Conclusion: The time-limitation clause was not enforceable to defeat the claim, and the award could not stand on that basis. The application was allowed and the claims were directed to be decided on merits by the arbitrator.

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